Industry News: May 2000

By Robert M. Hausman

Attendance, Sales Up At Year 2000 SHOT Show, H&K Being Sold

Record-setting attendance and extremely strong sales highlighted the 22nd annual Shooting, Hunting and Outdoor Trade (SHOT) Show, which turned out to be the largest and one of the most successful ever.

Happy to be back in Las Vegas, exhibitors and retailers were upbeat throughout the four-day event at the Sands Expo & Convention Center January 17-20. With nearly 11,000 buyers filling the show the first day-a record number-sales were strong right from the opening bell.

Total attendance was 29,410, a number that pleased organizers who had been forced to move the show at a late date to Las Vegas. The move occurred after scheduled host New Orleans filed a lawsuit against firearms manufacturers. Of the total attendance, there were 16,700 dealers-nearly 3,000 more than the previous year-and 10,727 exhibitors. The remainder consisted of media representatives and guests. There was a total of 2,894 international buyers and exhibitors.

The show also set a record for the number of pre-registered attendees, which was 19,145, more than double the amount of last year’s show in Atlanta. A stiff on-site registration fee of $100 had been imposed this year to dissuade attendees from registering on-site. Concerns over fire safety regulations which stipulated that the Sands Convention Center’s lobby could only hold 500 persons at any one time prompted the hike in the on-site registration fee.

“This show continues to build on the history of all previous successes,” said Steve Hornady of Hornady Manufacturing. “It was a real bin-buster.” During the show, Hornady was named the industry’s “Man of the Year” by SHOT Business magazine.

Yet another attendance record was set in the press room, where 1,329 members of the outdoor and general media were registered to cover the event. The media included national television news crews from ABC, NBC, CBS, CNN, as well as journalists from The New York Times, The Wall Street Journal, Los Angeles Times and the Detroit Free Press.

“This successful SHOT Show proves to any that would doubt it, that our industry is in very good shape and is thriving despite considerable challenges,” said Bob Delfay, president and CEO of the National Shooting Sports Foundation, which owns the SHOT Show.

The event once again served as a rallying point for the industry, whose leaders recapped the status of legal proceedings in the municipal lawsuits against the industry. Plans were also drawn for an aggressive response to meet future needs, including establishing a political action committee. Exhibitors and retailers were briefed on these matters during a “State of the Industry” report on the show’s opening day.

State of the Industry

During the meeting, industry leaders provided an overview of the progress being made in the municipal lawsuits, new programs to promote the shooting sports, and the creation of an industry political action committee to accept and administer political contributions. These responses to challenges facing the industry were met with loud applause. The evening’s guest speaker, former Wyoming Senator Alan Simpson, put the industry’s mission bluntly, “Take part or get taken apart.”

During opening comments to the meeting, Delfay noted that although guns and gun control have been in the news for years, a new dynamic is the extent to which the firearms industry itself, has become news and “the alarming degree to which the media seems willing to further efforts to demonize our industry by giving newspaper space and air time to our adversaries while often dismissing our messages and factual response.”

Delfay then contrasted the challenges facing the industry by noting its assets. These consist of:

—A participant base of 26-30 million customers to whom shooting is more than hobbies-they are a way of life passed on to children much like valued family heirlooms.

—Interest in firearms and other outdoor products that has fueled an excellent, if not an all-time record year for many industry firms.

—Legions of dedicated and resolute supporters in the halls of congress and state and local government who refuse to enact restrictions on responsible and law-abiding firearms users.

“As an umbrella over all of this, is the launch of our Hunting and Shooting Sports Heritage Fund and the industry unity it has fostered,” Delfay added. The Fund is fueled by a voluntary one-half of one percent to a full one percent contribution on sales made by industry firms. Nearly the entire gun industry has signed on since the Fund was first announced at the 1999 SHOT Show held in Atlanta.

Delfay next turned his attention to the 29 municipal lawsuits filed against the industry. “Most of you know we agreed to participate in discussions with representatives of those same mayors who have sued us,” Delfay said. “We begin each and every meeting with the statement that we will discuss any idea that might help further reduce firearms accidents or help our friends in law enforcement prevent and prosecute criminal firearms use.

“We will not entertain illogical and ineffective ideas that might further some political agenda while having no impact on crime or accidents. The White House has inserted itself by threatening a massive suit coordinated by the Department of Housing and Urban Development (HUD) if our discussions with mayors don’t go the way they like-as fast as they like. Even The Washington Post, not known as one of our industry’s best allies, has criticized this blatant political maneuver.”

While industry officials did agree to a preliminary meeting with White House personnel during the SHOT Show, it was later cancelled. However, it may be held at another time.

“We will not allow this openly anti-gun administration to pressure us into an agreement that will impact our customers’ rights to own and use firearms-or the industry’s right to conduct responsible businesses, while having no impact on the criminal use of firearms,” Delfay continued.

“Never before in our history has the firearms issue risen so high in the national political agenda. Gun issues will play a central role in presidential, senate and congressional elections,” he said.

PAC Formation

While the firearms industry has not been very politically active in the past, a political action committee has been formed to accept and administer political contributions. A database of shooting sports consumers is presently being gathered based largely on names obtained from industry product warranty cards. The database currently numbers about 500,000 names and the list of names is expected to grow into the millions within the next few months.

“This upcoming election will impact our industry and we must have an impact on this election,” Delfay emphasized.

Exhibitor Comments

Despite the inconveniences caused by moving the show venue and fears that the Sands Convention Center was too small to adequately house the largest shooting and outdoor trade show in the world, industry representatives had nothing but praise for the event.

“This was the best show ever for Bianchi,” said Elaine Costello, Bianchi’s trade show coordinator. And custom gunmaker Les Bear said, “I’ve written more orders here than the last four years put together.”

Foreign manufacturers were equally upbeat, “As a direct result of our appearance at the show, production will increase over 54%,” said Stephen Sales of Kent-Gamebor, the English ammunition maker. “The American market has far surpassed the European, after this show.”

One of the record number of dealers was Larry R. Smith of Trader’s Gun Shop in South Carolina, who said, “I spent two days buying and I am worn out.” After a stroll through the show’s New Products Center, which highlights products released in the last 12 months, Rege Kostrub of Vinay’s Gun Shop in Homestead, PA, commented, “This year’s new products are incredible.”

Olympic gold medalist Kim Rhode, now 18 years old and part of the staff at the Perazzi booth, said, “Notice the aisles are clear and the booths are filled. I think that makes for a great show.” Another observer, world champion IPSC shooter Todd Jarrett, asked, “Uplifting, can you believe the show traffic?”

Strong sales covered the entire spectrum of the show, from firearms to accessories to apparel. “We sold hard from opening day until the middle of the third day,” disclosed David Robinson of Columbia Sportswear. “We never had a moment to rest. It’s been a killer show.”

Watch for further coverage of the new products and happenings occurring at the SHOT Show in this column and elsewhere in forthcoming issues of SAR.

H&K For Sale

An investment group formed by Zilkha & Co. of New York City has signed a latter of intent to purchase the German small arms manufacturer Heckler & Koch (H&K). Zilkha and its investment associates also own a controlling interest in new Colt Holding Corp., but this latest pending acquisition does not involve Colt’s, as was erroneously reported in The Wall Street Journal and elsewhere.

According to a story carried by the Reuters news service, Heckler & Koch, GmbH would be acquired for slightly more than $100 million, or 98.7 million euros. H&K is owned by a unit of British Aerospace PLC, now operating as BAE Systems.

The combined company would be in a formidable position to compete for military rifle and grenade launcher contracts, John Rigas, a partner in the Zilkha investment firm, told reporters. BAE Systems is reportedly Europe’s largest defense contractor.

H&K’s executive office in the US released an announcement in January on the pending acquisition. It reads, “Over the years, H&K has been pursued by several companies attracted to the high quality, technologically advanced product we manufacture. Currently, Colt (sic) Manufacturing Co. is one of these companies.

“While a letter of intent has been signed by Colt’s Manufacturing Co. and BAE Systems, these companies are still in the early stages of negotiation regarding the possible sale of H&K. We can confirm, as of January 10, 2000, that these negotiations are ongoing.

“It is ‘business as usual’ at H&K. We continue to design, manufacture and ship high-quality, technologically advanced product and look forward to a healthy and profitable 2000,” the statement explained.

When contacted by this reporter, both Colt’s CEO, retired General William Keys, and Colt’s chairman, Donald Zilkha, denied Colt’s is involved in the proposed transaction involving H&K. An investment group formed by Zilkha & Co., not involving Colt’s, is seeking to acquire H&K, both insisted.

“Colt’s cannot involve itself in an acquisition of this size (reportedly $100 million),” said Keys. “We are concentrating on getting our financial house in order.”

Other News

In other items of interest, although the federal government has awarded a $8.5 million contract to Alliant Techsystems Inc. of Hopkins, Minnesota, to develop a prototype high-tech combat rifle, the US Army and Marines are already seeking a lighter version. Known as the Objective Individual Combat Weapon (OICW), it will be one of five major sub-systems in the Army’s futuristic Land Warrior system. Alliant said the Army is trying to decrease the gun’s weight, make it more rugged and include a device that can tract moving targets. The services have a target goal of less than the currently planned weight of 14 pounds.

The OICW is expected to be available for field use in 2006, and the Army and Marines have budgeted $43 million to purchase about 20,000 units. The OICW concept combines a rifle, video camera, electronic fire control with laser rangefinder, and dual ammo capability allowing the firing of either 5.56mm rifle rounds or 20mm high-explosive air-burst munitions.

Hailed as a possible replacement for the M-16 rifle, the $10,000 per copy OICW will allow soldiers to virtually shoot around obstacles. Using its laser rangefinder to determine an obstacle’s distance, the arm can fire an air-bursting round, hurtling shrapnel behind the obstacle.

The team of companies working with Alliant Techsystems to develop the OICW includes H&K.

A similar bursting munition is being evaluated by the US Army as well. During recent Military Operations in Urban Terrain (MOUT) exercises involving the testing of technologies for use in fighting in urban environments, the Israeli-built Rifle Launched Entry Munition was found to offer great benefits. It can be fired from an M-16 rifle and is designed to knock down doors or blow holes in walls. Used by Israeli Special Forces for several years, it was ordered by the US Army through emergency channels for possible use in Kosovo.